Since 2013, CIPE has been working with the Federation of Chambers of Commerce and Production (FEDECAMARAS) to strengthen the capacity of local entrepreneurs and promote the values of democracy and free market initiative in Venezuela. FEDECAMARAS is a private, non-profit civil association with over 250 business association members encompassing 13 business sectors and 23 regional state chambers. Despite the hostile political and economic climate that took root under Chávez and has persisted under his successor Nicolás Maduro, FEDECAMARAS has worked tirelessly to strengthen the Venezuelan business climate through the principles of economic freedom and democracy.

Roig stressed the importance of cooperation between business, society, and government, saying that without engaging these groups in dialogue, substantive change will not occur. In recent years, the Chávez and Maduro governments have depicted the private sector and organizations such as FEDECAMARAS as the source of Venezuela’s economic problems, claiming they have political aspirations. However, Roig defined the role of FEDECAMARAS very clearly – not to be a political power, but rather to influence it on behalf of entrepreneurs. Furthermore, organizations such as FEDECAMARAS not only protect free enterprise, but also support democratic values and act in the best interests of the society as a whole.

To anyone who has traveled frequently to Venezuela, the deterioration of the country is palpable. By day, people fear driving and getting stuck in traffic because motorcycle thugs will tap on their window, show a gun, and demand the handover of cell phones and cash. By night it is worse: going out on the town could involve robbery, kidnapping, and risk of death, so the streets are empty on Friday and Saturday nights in a city that previously boasted an active nightlife.

Shopping is another sad tale — commercial malls show a lack of maintenance, and stores have little merchandise. The common refrain you hear everywhere is “no hay,” or “there aren’t any.” You hear that when asking for anything from cell phones to toilet paper. You hear it in restaurants, too, where chefs somehow manage to figure out how to cook without basic staples such as cooking oil or flour.

If you can even get an airline ticket to Venezuela—international carriers are prevented from taking their profits out of the country, so they are curtailing flights—you will find prices depend entirely on the exchange rate you are able to obtain. If you change money at official rates you will pay $25 for a sandwich and a cup of coffee. If you are lucky enough to obtain the parallel exchange rate—which is running upwards of 10 ten times the official rate—the same meal will cost you $2.50.

How do Venezuelans cope with living this way? There are significant segments of society that still support the government of Nicolás Maduro despite its inability or unwillingness to tackle the huge economic problems the country faces, and which they have mostly caused. As the economy worsens, however, it seems unlikely that even the poorest segments of Venezuelan society who supported Hugo Chavez and now Maduro will continue to provide that support.

Recent developments concerning property rights violations and popular riots in Venezuela remind us that democratic and economic development is not always a gradual forward-looking process but instead is characterized by periods of progress as well as setbacks. Separation of powers, property rights, the rule of law, the respect of human rights and the rights of minorities are essential components of a functioning democratic and free market system.

Reflecting on the challenging situation in Venezuela and the business community’s experience of threats to private property rights, Jorge Roig, President of the Venezuelan Federation of Chambers of Commerce FEDECAMARAS, was invited by the Free Enterprise and Democracy Network to share his views in the latest Economic Reform Feature Service article.

CIPE’s partner CEDICE Libertad joins many other organizations in Venezuela and throughout the world in denouncing the Venezuelan government’s violations against human rights, extending from individual freedoms all the way to citizens’ property rights.

December’s local election results are in for Venezuela, and the opposition can rightly claim that it not only retained major urban areas such as Greater Caracas, Maracaibo and Merida, but regained others it had lost such as Valencia, Barquisimeto, and San Cristobal. In addition they made inroads in “Chavista cities” such as Chavez´s own home town of Barinas and Diosdado Cabello’s home town of Maturin. Moreover, despite how the Electoral College blatantly manipulated the way results were broadcast, in the overall national vote tally the opposition candidates beat out the government’s by 51 to 49 percent.

On the minus side for the opposition, former presidential candidate Henrique Capriles tried to bill the contest as a referendum on President Maduro, but this didn´t pan out either from the perspective of voter turnout (only about 58.5 percent vs. over 80 percent in the April presidential election) or the difference in total vote.

What we are left with moving forward is a political environment that continues to be polarized. During the two months previous to the election, the government made private business the culprit for inflation and scarcities of goods, while simultaneously taking steps that practically insure higher inflation, perhaps hyperinflation in 2014.

Property is the basic building block of all business interactions that occur in our daily lives. But as a recent report from The Property Rights Alliance shows, the lack of secure property rights is holding many countries back from reaching their true economic potential.

Long before the United Nation’s enshrined it as a human right, property has been the medium through which we trade. Without the right to property, an individual is left with no means to securing the basic necessities and is left reliant on others. When property rights are secure, we have the freedom to seek innovative business opportunities. Through property rights, we are able to invest in our future, improve our circumstances, and, in turn, contribute to the growth of the market and economy in which we function.

As an extension of this human right, small businesses and entrepreneurs must have secure rights to their property. Peruvian economist and expert in the informal sector and property rights Hernando de Soto has termed the absence of such security “dead capital.” He pointed out that even though a business might have the physical resources such as land or a building, its hands are tied in putting it to work unless property rights to such resources are well established and secure. When such assurances are absent, businesses and individuals are forced to operate in the informal sector, costing all parties in potential revenues in the forms of taxes and the subsequent services from the state.

As we have seen through countless studies and recent articles, property rights go hand in hand with the development of families, communities, and nations – especially women’s ownership. When women own their property, they invest more in food, education, and the security of the next generation. Yet, in many places around the world today, property rights are under siege and women’s property rights are not guaranteed because of inheritance laws or through outright gendered policies favoring men.

It is within this context that The Property Rights Alliance released its 2013 International Property Rights Index (IPRI). The IPRI report is an annual evaluation of 131 nations on their performance in property rights in four categories: overall property rights, the legal and political environment, physical property rights, and intellectual property rights. The IPRI report demonstrates the connection between a nation’s property rights and its economic development. In this year’s Index, Finland receives the highest overall score of 8.6 (out of 10), while Yemen is ranked last at number 131.

About

The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.